The US government has filed a lawsuit against Deutsche Bank for allegedly creating shell companies to avoid paying millions of dollars in federal taxes.
The lawsuit filed by US Attorney Preet Bharara in Manhattan seeks to recover $190m in taxes, penalties and interest.
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Bharara said the case arose from Deutsche Bank’s late 1999 purchase of a corporation that was sitting on an unrealized $150m gain in shares of drug maker Bristol-Myers Squibb Co.
The lawsuit alleged that Deutsche Bank sold the stock for below fair value to the shell companies in 2000 to avoid a potential $51m of federal income taxes on the gain.
These shell companies in turn sold the stock to a different Deutsche Bank entity, triggering the tax liability, only to then repay the loans, leaving them without funds to pay taxes.
But the German bank contends that it reached a settlement with the I.R.S. over the same tax dispute in 2009.
"It is not clear to us why we are being pursued again for the same taxes," the banking giant said in a statement. The bank added that it will defend vigorously against the claims.
